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Southern Colorado Insurance Center Blog

All You Ever Wanted to Know About Insurance

Why You Need Bid, Performance and License Bonds for Your Construction Project

As a contractor, it is important that you protect your business when working on projects. But what about your customers? As trustworthy as your company may be, they'll still desire their own protections to ensure the project is completed as agreed. To give your clients greater peace of mind, there are several bonds they will likely request. Even if they don't, it is still a good idea to have them in place, as it demonstrates your company's commitment to client needs. Southern Colorado Insurance Center can help find the right options for you; here’s a look at a few of the most common. 

Bid Bonds 

Client trust begins when you first place a bid on a project. Your potential client will undoubtedly have several bids to consider before making a final decision, and a bid bond guarantees that your organization will complete the project if your bid is selected. While this may seem obvious, some contractors win bids but then choose to bail on the project due to changes in their schedule or other circumstances, forcing the client to choose a new bid, wasting valuable time in the process. A bid bond will show prospective clients that you are fully committed right from the start. 

Performance Bonds 

Once you have accepted the bid and agreed to begin work on a project, a performance bond will provide a guarantee that you will get the job done. If an unforeseen emergency arises that will prevent your company from completing the project, the performance bond will protect the client against financial losses that arise due to having to source a new contractor to complete the remainder of the job. 

License and Permit Bonds 

License and permit bonds, often simply called license bonds, verify that your company will comply with all local, state and federal licensing requirements for the duration of the project. As a reputable contractor, you will undoubtedly be doing this anyway, but your customers will appreciate the added security the bond will provide. It will protect them against any potentially fraudulent activity on your part, even if the risk is minimal. 

Learn More about Bid, Performance and License Bonds 

To ensure you present your business to clients in the best possible light, you'll want to have all of these bonds in place before beginning work on any project. Here at Southern Colorado Insurance Center, we can help put your organization in touch with the appropriate bond companies to meet your needs. We'll handle all of the hard work for you in obtaining these bonds so you can focus on the project at hand. Reach out to us today to get started.